Are we heading towards a cashless Canada?
The cannibalization of cash has been rapidly increasing around the world, and as technology continues to evolve, new payment behaviours are permeating across society. Canada is known for its advancements in technology, and its secure and safe regulatory foundations, making it the perfect place to lead the global payments revolution. Ahead of her keynote presentation at the Canadian Payments Innovation Forum in November 2017, Stacey Madge, Country Manager & President for Visa Canada met with Sarah Hollinshead, Head of Media & Events, RFi Group, to discuss Canada’s move towards a cashless society.
Stacey began with a reference to the Google I/O Conference earlier this year, quoting the phrase: “We are moving from mobile-first to AI first”. Her belief in a cashless society being a reality is unwavering, of course, not in the immediate future. With mobile phone usage ubiquitous, and not just in the developed world, it begs the question, where next and who is driving the change?
"We know customers are more and more impatient because technology has fundamentally changed their expectations."
For Visa, it is the customer dictating the shape of the market.
“We know customers are more and more impatient because technology has fundamentally changed their expectations. There is a study that shows that customers won’t wait more than two seconds for a video to load!”
This has translated into payment experiences, believes Stacey, resulting in a demand for faster and more invisible payments, with the likes of Uber and Starbucks apps becoming the norm, where the payment happens automatically after the click of the order. The next move is from destination to encountered commerce, Stacey explains.
“In most cases, on your phone, shopping on the laptop, sitting in front of the TV, there are payment buttons everywhere. The future of payments will be more predictive. The best example of this is your fridge or kitchen knowing you are out of something and ordering it for you automatically.”
"The future of payments will be more predictive.
The best example of this is your fridge or kitchen knowing you are out of something and ordering it for you automatically."
Stacey continues to explain that commerce will also become more contextual, according to where the customer already is.
“We are going to continue to see the movement from multiple apps to a single app. Today, customers have to open each individual app for different purposes; directions, order food, order coffee. This is not what customers want in the future. WeChat in China provides an excellent example of that; not only can you message and send pictures to your friends in the app, but you can also book time at a restaurant, pay for that meal and get directions there."
“It used to be that China was a copy-cat of several different technologies, but now we are seeing North American companies looking to the Chinese, especially in this area of digital. Google Assistant has many of WeChat’s characteristics, and we will see more of this type of innovation in North America. With 3.4 billion customers use messaging apps, and they spend 48 minutes a day on social apps.”
Visa’s goal is to establish partnerships with the key players driving this change in the payments eco-system, being the payment rails to support the innovation. For example, Visa recently partnered with Uber in the United States, provisioning a digital card in real time, and through APIs, allowing customers to push the Visa card to be the main card of choice on all their favourite apps. Strategic moves like this keep Visa relevant as payments become more invisible.
"I think this is an analogy for Canada - always a little bit more safe, less risky, but this provides a fantastic foundation for really excelling as a global champion for digital payments.
Country Manager & President, Visa Canada"
Although customer behaviour is at the centre of all change, without the significant advancements in technology, payments could not be progressing at this impressive rate. Stacey highlights voice and vision as creating the next opportunities in the market.
“Advancements in voice have allowed a whole new stream for payments. I think the accuracy for Google on voice is about 95%. The Google home device can identify 6 discreet voices – which is incredible! It means when I say, ‘buy some peanut butter’, it will correctly respond, but when my daughter says, ‘buy this car’, it thankfully it won’t!”
"Visioning technology has advanced above human vision, and we are already using this with respect to our risk technologies to better detect fraud and as another form of biometrics to authenticate a person."
“Furthermore, visioning technology has advanced above human vision, and we are already using this with respect to our risk technologies to better detect fraud and as another form of biometrics to authenticate a person. So much sophistication is going on here.”
It is important to remember the role of the merchant in the move towards a cashless world. Stacey highlights the significant changes in the ability for retailers to support new methods of payments.
“For a retailer to be able to accept debit or credit cards, they used to have to install very expensive terminals, taking weeks or months. Now, it is as simple as downloading an app in a few minutes! Square, for example, just launched a new contactless device for retailers in Canada, costing just $59, soon to be available to buy on little hooks in Staples. Acceptance is cheaper and easier than ever before to achieve.”
"What excites me about my role is being able to play a big part in making Canada a place that other countries look to as a digital leader."
The movements in the Canadian payments scene are what drove Stacey back to this area of focus. Preceding her time at Visa, she spent almost 20 years serving in other markets, as a consultant for McKinsey & Company and as a retail banker for Scotiabank. Having an understanding and managing the complexity of so many contrasting markets around the world is what makes Stacey such a unique leader in Canada.
“I was excited to come back to Canada, in a space that I love and working on things for the betterment of Canada. What excites me about my role is being able to play a big part in making Canada a place that other countries look to as a digital leader.”
Canada seems to benefit from being a fast follower of other markets around the world, especially in payments. Their real-time payments modernization is happening now, and follows behind Europe and Australia in making such moves. Stacey references Adam Grant’s book, “Originals”, to highlight the method behind this.
“The book talks about the entrepreneur and the birth of all of these great companies, many of which are digital. If you actually look at the history of these ‘risky’ companies that are breaking the mould, their routes are often in safety and security. I think this is an analogy for Canada – always a little bit more safe, less risky, but this provides a fantastic foundation for really excelling as a global champion for digital payments.”
Similarly, with open banking in Europe, Canada, like the rest of the world, will be studying the fall-out of PSD2 closely.
“At Visa, we believe in fostering competition and innovation. For open banking, it has to be done in a context of making sure that the customer is aware of what is being done to his or her data. And the process of asking the customer for their permission cannot be overly cumbersome. Our view would be to be thoughtful in terms of how fast it happens, so as to not introduce new data risks if not done well.”
"At Visa, we believe in fostering competition and innovation. For open banking, it has to be done in a context of making sure that the customer is aware of what is being done to his or her data."
So, although a cashless society is not on our doorsteps, with consumer demand evolving quicker than ever, with more advanced technology and regulation, and with incredible leaders such as Visa, and more specifically Stacey Madge involved, the Canadian payments scene could transform faster than we could imagine.